Merchants appeal $7.2 billion card-fee settlement

NEW YORK (Reuters) - A group of retailers on Tuesday appealed a court order preliminarily approving a $7.2 billion settlement between Visa Inc, Mastercard Inc and merchants over credit card fees, saying it violated their rights by preventing them from opting out of the pact.

U.S. District Judge John Gleeson in Brooklyn federal court gave the settlement his initial stamp of approval earlier this month. If the deal receives final approval, it would be the largest federal antitrust settlement in U.S. history, offering nearly 8 million merchants $7.2 billion in cash and temporary reductions in the interchange, or swipe fees, they pay to process credit and debit transactions.

Ten of the 19 stores and trade groups that brought the proposed class action have come out in opposition to the pact. Those 10 stores and trade groups - which include the National Association of Convenience Stores, the National Restaurant Association and D'Agostino Supermarkets Inc - filed notice Tuesday that they would appeal Gleeson's order to the 2nd U.S. Circuit Court of Appeals.

Hundreds of merchants, including the world's largest retailer, Wal-Mart Stores Inc, also have objected to the proposed settlement, claiming it offers meaningless relief for merchants saddled with an estimated $30 billion in annual swipe fees.

In their appeal, the 10 objecting merchant plaintiffs are challenging a portion of the order that would release Visa and Mastercard from new legal claims over related interchange issues. The proposed settlement does not allow stores to opt out of these litigation releases - even while final approval is pending - and therefore it robs stores of their legal rights, said Jeff Shinder, a lawyer who represents the objecting plaintiffs.

"The proposed settlement violates the due process rights of millions of merchants by denying them the ability to opt out of the injunction, and this fundamental issue of law should be addressed now before notice goes out to merchants," Shinder said Tuesday.

Craig Wildfang, a lawyer for the merchants that support the deal, said in an e-mail: "We are confident that the Court of Appeals will sustain Judge Gleeson's decision to grant preliminary approval."

Visa could not be immediately reached for comment. A spokesman for Mastercard said the company remains confident that the deal will receive final approval.
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